Structural working capital

Structural working capital (BFR structurel) is the level of working capital inherent to a company's business model — the funding required by its operating cycle that will exist regardless of seasonal or cyclical variations. It differs from cyclical working capital fluctuations and represents the permanent financing need to be maintained post-acquisition. In financial due diligence, distinguishing structural from cyclical working capital components is essential for accurate BFR normalisation and setting the working capital reference in completion accounts price adjustment mechanisms.

‍

Example: a Swiss hotel company presents working capital ranging from CHF 2.8 to 4.2 million across 12 months due to seasonal tourism peaks. After stripping out the seasonal cyclical component (CHF 1.4 million peak swing), the structural working capital is CHF 2.8 million — the minimum level consistently maintained throughout the year and the correct reference for the completion accounts normalised working capital clause in the SPA.

‍

Hectelion identifies and documents structural working capital in every due diligence, separating it from cyclical variations to build a defensible SPA reference.